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July 2, 2013

Payment Processing — How Do I Choose?

Picking a payment processor is one of the most important aspects of starting a website.  If you have an e-commerce site or provide services, it is essential you choose a processor that will meet your customers’ needs and, at the same time, keep your costs low.

What is a Payment Processor?

Also known as a payment gateway, a processor is a point of sale tool, much like a counter at a brick and mortar store. The processor you choose will transfer, verify, submit and receive transaction information to the credit card network on behalf of the merchant, using secure Internet connections. The payment processor is the basic infrastructure that allows a merchant to accept credit cards and other forms of electronic payments.

So Many Choices — How Do I Choose?

When we began our company, we scoured the Internet for a processor that would fit our needs. We needed an ultra-secure connection that would, at the same time, be easy to use. We didn’t want our users to have to jump through proverbial hoops to start and fund their account.

The many nuances and, to be blunt, false promises presented by various processors, only compounded our confusion in choosing.  In choosing a payment processor, we broke it down into six essential things we were looking for:

Site compatibility — The processor we chose, had to be compatible with our site.  In fact, this is the very first thing you should investigate.  You may find that a processor fits all of your needs in every way, but if it doesn’t work with your site infrastructure, you can’t implement it.

PCI-Compliance — A bit of legalese here: Any payment gateway provider you choose must meet PCI-compliance (PCI-DSS) standards or use a trusted source to meet compliance standards.

Multiple card and currency support — If you plan to offer services or items for sale outside of the United States and Canada, make sure the processor offers support for multiple types of credit cards, other forms of online payment and different currencies as well. Our company is currently only available for users within the United States and Canada, but we wanted to make sure that our processor could handle foreign transactions, if and when we decide to offer it.

Recurring billing and phone order support — If you offer a subscription-based service you need to ensure the payment gateway supports prepaid billing and automated recurring billing (ARB), and that it also offers management tools for reviewing a customer’s account balance and history. Another important feature is the capability to log in and manually process customer transactions — a phone order for example. This service is called a “virtual terminal,” and it is a service the payment gateway provider you choose should offer.

Fraud detection —  Make sure that the processor you choose supports industry standards like the Address Verification System, this security feature ensures the customer’s credit card billing address matches that of the credit card issuer’s information.

Fees — Oh those pesky fees. Be careful, there are a range of fees, and some services can get pretty imaginative with how they charge you. Fees might include a setup fee, monthly/yearly fee, fee per transaction (fixed or percentage), withdrawal fees (getting charged to get paid – amazing!), chargeback fees (these can add up quickly), fraud detection fees and possibly more. You’ll need to have an estimated number of transactions per month before you start to work out the best service for you.

Your needs as a company may change as you grow, and it’s OK to add another or several other payment processors. We have found that to be the case, and are continually assessing our needs to meet those of our customers. With a little patience and a lot of research, you should be able to find the perfect fit for your company.

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